The EV’s free ride appears to be over

Originally published: November 8, 2012

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I have a burning question. At least I think it’s burning, though I doubt it will trouble few others than the poor souls who have nothing better to do on Friday mornings than read this pathetic column. It is neither deep nor, at first blush, particularly urgent. It might not actually even be fair. Nonetheless, I am deeply vexed by this: Who will Chris Paine blame now for the failure of the electric vehicle?

Mr. Paine is, of course, the director of Who Killed the Electric Car, the Hollywood screed dressed up as a documentary that blamed General Motors for selfishly killing off the Saturn EV1 when there were supposedly droves of environmentally conscious souls begging to fork over their ”Fair Trade” dollars to drive emissions-free. The film trotted out “experts” such as Alexandra Paul, whose turn as the “brainy” Baywatch lifeguard somehow gave her the bona fides to comment on the viability of electric propulsion. And, of course, the film rehashed the legendary Pogue carburetor bugaboo that the anti-EV conspiracy was just the oil companies up to their old quash-the-world-saving-technology trickery.

But what will the environmentalist lobbies do now that virtually everyone supports automotive electrification? Who will be the new fall guy blamed for its lack of success? And a fall guy/person will be needed for, if history tells us anything, the enviro-weenies will demand their Judas.

It can’t be big business because, until recently, any auto company that had even a spare research dollar handed it over to any electrical engineer it could find. It can’t be governments’ fault as virtually every regime in the developed world has some form of subsidy for new EV sales, not to mention the infrastructure developments needed to feed them juice. Nor can it the mainstream media, which has given everyone in the EV business — from well-meaning Nissan CEO Carlos Ghosn to that Better Place huckster, Shai Agassi — a free ride, accepting their casual brushings asides of the electric car’s limitations.

Nor is this a casual question, for the EV is floundering and, frankly, even faster than I expected. Sales for Nissan’s Leaf, for instance, are down 28% from last year and have so far totalled just more than 38,000 units worldwide, a far cry from the 1.5 million electric cars Mr. Ghosn promised Nissan/Renault would sell by 2016. So far this year, Nissan has sold 5,212 Leafs in the United States, though the company’s Smyrna, Tenn. plant will soon have the capacity to build 150,000 annually. More depressing is that the Leaf is just recycling early environmental converts, almost 20% of its sales going to former Toyota Prius owners alone.

Chevrolet’s enhanced-range Volt is actually doing better, outselling the Leaf in the United States. But that might be small consolation as Reuters recently reported (with some rebuff, I must caution) that The General was losing upward of $49,000 on every Volt it sells. That possible profit/loss scenario is a serious issue since one California Nissan dealer recently resorted to a $139 monthly lease offer (an incredibly low price for a car that retails for $38,270) to boost Leaf sales.

Meanwhile, Mitsubishi’s i-MiEV is selling mostly to fleet operations, and Tesla and Fisker have both announced delays in upcoming models, the former recently telling analysts that production of its Atlantic may now be pushed back to 2015. Smart’s fortwo is struggling for consistent sales; an even less practical EV version is unlikely to cause a dramatic reversal of fortunes. A123, which helped develop the Chevrolet Volt’s batteries and the current supplier to Fisker, recently filed for bankruptcy (though, admittedly, its automotive assets were quickly purchased by Johnson Controls), in part because of the recall of the Karma batteries but also because EV sales are nowhere near projected. More telling, however, is that Toyota, by far automotivedom’s best marketer of “green,” has, at least temporarily, suspended EV production. Yes, it will continue to produce the 2,600 electric RAV4s jointly developed with Tesla, but, after that, Toyota will concentrate on hybrids, which continue to be a success story for the automotive giant.

And it’s not only automakers questioning the vast monies put into electric vehicle development. Governments around the world, having adopted generous consumer subsidies for any car with an electron, are now questioning their efficacy. Japan, Germany and England are all debating whether their ambitious goals for EV sales are viable and whether the costs of building their supporting infrastructure is worth supporting, especially in these financially strapped times. Even California cut its EV rebates in half as a result of fiscal restraints. U.S. President Barack Obama looks to continue to support his electric vehicle initiative.

All this is to say that the electric vehicle’s free ride would appear to be over. It’s difficult to say exactly what has killed the electric car this time, but the one common denominator is this: All its proponents — from Mr. Ghosn touting its versatility to Mr. Paine claiming a huge pent-up demand — have oversold its capabilities. Eventually, hype must always become reality, even when you’re saving mankind.